Big tech earnings begin with Microsoft and Alphabet

Microsoft Q2 earnings preview.

Microsoft releases earnings after the close and is expected to post EPS of $2.29 on revenue of $52.4 billion after posting EPS of $2.22 on revenue of $49.36 billion in the previous quarter.

The numbers come after Microsoft said in May that it was slowing hiring and then in June warned about the impact of a strong and rising USD. This was when the USD was 102.00; today, it sits at around 106.00.

Cloud computing, led by Azure, will continue to be the engine for growth as companies continue upgrading and digitizing their business, which also supports demand for software and subscriptions. Bloomberg reported that Microsoft Azure cloud segment has also cut job openings, which would be significant and suggest that forward guidance could be lowered.

Where next for Microsoft share price?

Microsoft has been trending lower since reaching an all-time high of 348 in November last year.

The share price dropped to a low of 249 in June before attempting a small recovery. The price trades below its 100 sma and falling trendline; although the rebound from 249 has seen the price rise above the 50 sna at 260, the price ran into resistance at 270 and has eased lower. For ow, the 50 sma is offering support at 260.

Should the support hold, buyers will need to break above 270 to expose the 100 sma at 275.00 and falling trendline resistance at 282.00. On the flip side, failure for the 50 sma to hold could see the price fall towards 246 at last week’s low, ahead of 242 at the 2022 low.

Alphabet Q2 earnings preview

Alphabet is due to report Q2 earnings after the close.

Expectations are for EPS of $1.28 on revenue of $69.95 billion. This comes after Alphabet reported EPS of $1.23 in Q1, which missed consensus estimates by 5 cents, although revenue beat. The numbers come as investors are nervous following the massive disappointment from SNAP’s poor results last week.

Will Google’s ad business suffer a similar fate in Q2?

Although some see Google’s search business as unrelated to social media advertising. As with other big tech, expect CEO Sundar Pichai to highlight the effect of the strong dollar on earnings. Investors will also be looking at the growth rate for Google cloud, which grew by just under 44% in Q1 YoY. The earnings come as the stock trades down 25% year to date.

EUR/JPY falls post BoJ minutes

EUR/JPY rose 0.4% in the previous session, boosted by the broadly upbeat mood in the market as investors shrugged off dire German business sentiment data.

The data from the IFO showed that business sentiment in the eurozone’s largest economy plunged in July amid rising energy prices, high inflation, and concerns regarding gas rationing, which could be required later in the year. The IFO considers that German is on the brink of recession. Today the price is falling following the minute of the July BoJ meeting, where the board shred to the need for ultra-low rates and vowed to defend its cap on bond yields with unlimited buying.

Inflation rose 2.2% in June. However, companies are reluctant to raise wages given the uncertain economic outlook. Today there is no high-impacting data from the EU or Japan, so that sentiment will drive trading.

Support can be found at 138.72 (weekly low) and 137.00 (July low).

Resistance for the index can be seen at 140.00 (April high) and 142.32 (July high).